By  on December 23, 2009

LAS VEGAS — This city has doubled down on luxury with the opening of the $8.5 billion CityCenter megadevelopment, but it could be a long time before there is any payoff.

The 18 million-square-foot complex is spread across 67 acres. It includes a lavish 500,000-square-foot luxury shopping mall called the Crystals that launched last week, along with hotels, a casino and condominiums designed by renowned architects such as Daniel Libeskind, David Rockwell, Sir Norman Foster, César Pelli, Art Gensler and Rafael Viñoly and represents more than the largest development on the famed Strip.

It’s an investment — some might say a gamble — for the future as the Vegas market struggles with an almost two-year decline.

And luxury labels such as Louis Vuitton, Versace, Dior, Gucci, Prada, Hermès, Fendi, Tiffany & Co., Van Cleef & Arpels, Cartier, Bulgari, Tom Ford, Bottega Veneta, Bally, Carolina Herrera and Paul Smith have bought in by leasing space at the Crystals.

Many experts say there is no easy or immediate solution to what ails this shopping, entertainment and gaming mecca.

“The country has demonized travel and excess, so Vegas in general and the luxury build-out at CityCenter are going to face a tough time at first; it’s like big corporate holiday parties, nobody is doing them anymore,” said Alexander Goldfarb, associate director at Sandler O’Neill, a New York-based research firm.

“I don’t see how just the CityCenter opening will change the market or save the whole Strip,” he said. “Everyone has dialed back, even high-roller types and the luxury consumers, so Las Vegas needs a lot more to happen and more time to turn things around.”

Las Vegas flew high during the go-go years of the last two decades, growing beyond gambling and big-name entertainers to take its place in the consumer pantheon as one of the globe’s top shopping destinations, with venues such as The Grand Canal Shoppes at The Venetian and The Shoppes at The Palazzo, The Forum Shops at Caesars, Las Vegas’ Fashion Show and glittering boutiques at the Wynn, Encore and other resorts.

However, the higher the arc, the steeper the fall.

No longer is Las Vegas considered impervious to the fluctuations of the national economy. Gaming revenue on the Strip is down, and retail and hotel vacancy rates are up as tourism has taken a beating. Unemployment is in double digits and Las Vegas has the highest home foreclosure rate in the U.S.

“When I decided to go in there, people told me, ‘You are crazy. The Vegas market is so bad.’ They wondered why I would do that,” said publisher Prosper Assouline, who opened his largest bookstore, at 2,200 square feet, in the Crystals last week. “It will be a great time for us because the project is so different and the store is unique. The other places with all the same stores and so many of the same brands over and over again — it’s so unbelievably boring.”

That certainly can’t be said of CityCenter.

A joint venture of MGM Mirage, the world’s second-largest gambling company by revenue, ­and financially troubled Dubai World, the state-owned holding company, the project is a paean to luxury during an era of diminished consumption. It is a collection of six shimmering, sleek, glass and steel towers.

The ultramodern project features an art collection valued at $40 million, including works by Henry Moore, Frank Stella, Claes Oldenburg and Maya Lin, a slew of celebrity chef-backed restaurants, five nightlife venues run by the Light Group, elaborate water displays from WET, high-roller suites and VIP gaming areas designed by Peter Marino and monorail access to other parts of the Strip.

Upon completion, it will have 6,291 hotel rooms, boosting the Strip’s capacity 8.5 percent.

“Does the world need one more Dior store or does Las Vegas need another Dior store? Maybe not, but that’s why we made this the place you must be in the market; it’s the hub for luxury west of the Hudson,” said Frank Visconti, MGM Mirage president of retail. “Vegas has never had anything like this. CityCenter as a whole is an experience. There is artwork, park areas and the world’s best retailers with a look people have not yet seen here.”

Not everyone thinks if you build it, they will come.

“The only thing that’s going to shore up the Strip is more visitors. Building the rooms and stores doesn’t make them come,” said Richard Kestenbaum, a partner in Triangle Capital LLC. “If this will really draw more visitors, that’s great, but I don’t believe it.”

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